November 2014
Planning ahead.




As we begin to shift in to the Winter season, many of us are beginning to prepare and budget for upcoming holidays and the new year. This set of articles for this month will help you do just that.


As we approach the end of 2014, we strongly urge you to get a jump start on your financial plan for 2015. Please feel free to give us a call to discuss your portfolio.


Be well.



Peter, Claudio and Joanna

Why a net worth statement is worth it

by Deanne Gage - November 2014,


Of all good things financial - a paid-off credit card, a Tax-Free Savings Account (TFSA), a financial plan - my favourite is a net worth statement.


Before you dismiss me as being full of baloney, why not take a couple of minutes to see if I'm onto something that could help you? I'll start with the benefits of a net worth statement, which is basically a summary of what you own and what you owe, then describe how you go about drawing one up.

My net worth statement makes me feel:

  • More responsible. It removes the guesswork about how we're doing.
  • More certain. I know which scary economic headlines to ignore.
  • More successful or more humble - depending on how our investments are doing.
  • Like a better partner. It gives my wife and I a mutual understanding of our shared financial situation.

It helps me see:

  • The big picture of our finances
  • If we're withdrawing more than 4% of our money as annual retirement income
  • If we have enough "liquid" money easily accessible for a rainy day
  • How much we owe
  • If we're keeping up with inflation or investment benchmarks

My net worth statement has also affected a couple of important decisions (neither of which I'm suggesting is right for you). We decided to put non-registered investments in my wife's name for tax reasons, and we could predict the advantage of downsizing our home, which let us retire early.


How to create your own net worth statement


You can use grade-school arithmetic (don't be intimidated!), a calculator or spreadsheet software. I use a spreadsheet because I can easily update the balances from the last time I calculated our net worth, then let the computer do the math. It should take one or two hours.

  1. First, check all of your most recent account statements or online balances. It should take less than an hour.
  2. Next, list and total your assets: the balances of saving/chequing accounts, RRSPs, TFSAs, non-registered investments, GICs, mutual funds, pensions, approximate value of your house, car, furniture, jewellery and other major possessions.
  3. Then list and total your debts: credit card balances, line of credit, personal loans, mortgage, etc.
  4. Then subtract our debts from our assets ... and that's your net worth.
  5. When you're done, look at the numbers. What are they telling you? Is there something you should do differently? We share our net worth statement with our financial advisor, because it can hint at issues or opportunities we haven't recognized. 

I've found that creating categories creates insights: How does my home equity compare to my investments? How much can I withdraw from accounts tax-free? What percentage of my assets is locked in? What's in my name, and what's in my wife's name?


I created our first net worth statement 10 years ago. I was finding our financial affairs were getting busier and more complex. I thought that the occasional look at our financial big picture would change our thinking. And it has; I only wish I'd started earlier. I think it would have helped us in those years when the big financial question was: "Should I pay down the mortgage or save for my retirement?"


Bright Ideas:Tips for calculating your net worth:

  • No guessing! Look up actual amounts.
  • Review and update your personal/beneficiary info when checking account balances.
  • Update your statement once a year or so - it's motivating!

To view the original article, click here.

Budgets, Cash Flow Plans, and Spending. Yawn.

by Sandi Martin - October 2014,


I know, I know. Budgets just sound like Remedial Personal Finance, don't they?Everyone knows you're supposed to budget, so what's the point of another 800 words or so on the topic, right?


There's even a vague feeling that once you reach a certain point - either of knowledge, or income, or net worth - budgeting is kind of beneath you. It's so remedial that the cool kids don't do it, and I'm here to look over my librarian glasses and tell you that the cool kids are wrong.


But first, in true librarian fashion, let's define the terms. When I talk about budgeting, or planned spending, or cash flow, I'm really talking about three separate but related things: tracking your transactions, clarifying your limits, and projecting your trends.


Not to get too timey-wimey on you, but that's the past, the present, and the future, all rolled up in one neat little concept. Nice.


Budgeting is - in this expanded and much more useful definition - not at all about putting limits on yourself, especially not limits that some random stranger on the internet, however wide their readership or juicy their television deal, wagged their finger at you about.


It's the tool you use to figure out your own limits according to your own values, and - like the proverbial Swiss Army Knife - some people need and use one part of the tool more than the others. (I prefer the corkscrew, but I assume you knew that already.)


Each one of these aspects of budgeting feeds into the next one: tracking your income and expenses helps you clarify your limits, projecting the results of your tracking helps you see where you're going and what levers you can pull to make the most difference if you don't like the direction, and knowing where you're headed gives you the motivation to keep within those agreed-upon limits.


Now, you can live your whole life without ever looking back on how you've spent your money, or worrying about how much you have left to spend at any one time, or wondering what all this spending will look like in the future. Plenty of people do, with varying degrees of success.


Those most successful are those who, by dint of much hard work or incredible good luck, have a very wide margin of error and enjoy the relatively rare situation of more income than their natural spending habits can use. Those with very slim margins are incredibly vulnerable and - no surprise here - least likely to thrive without structured spending.


In fact, I'd venture to say that everyone reading this can be split into one of three broad categories: those of you with a very small difference between what comes in every month and what goes right back out, those of you with a very large difference between your income and your expenses, and those of you in the middle. (Hey, I didn't say it was going to be rocket science.)


For those with very slim margins, it should be readily apparent that the immediate need is to know how much you have available to spend at any one time. Without a good overview of where your money goes over time and what that means for your future, though, you'll have a tough time making that margin grow, especially if your circumstances also make it difficult to increase your income.


As margins get bigger, the "how much do I have left" part of budgeting starts to fade in importance compared to using your past and current spending in order to forecast (and shape) your future spending. If you have more than enough money to meet your needs every month, what's it doing for you other than giving you an excuse to Not Budget?


Here's the over-arching truth, though, and the number one reason why the cool kids who don't budget are wrong: margins change. Circumstances change. Jobs, dividend cheques, interest rates, your health, the health of your marriage... there are any number of events or combinations thereof that can turn your financial life around pretty quickly, for good or ill.


Budgeting is a skill that you have to practice, a data set that you have to maintain, and a system that you have to adjust so that it fits you and your circumstances as closely as possible. None of these things happen overnight, and the very worst time to start is in the middle of a crisis. Get cracking.


View original article here.

Five smart ways to stretch your holiday budget

by Helen Burnett-Nichols - November 2014,


The holiday season is just around the corner, bringing with it parties, gift-giving, travel and extravagant feasts - but how can you have a great time and pamper the ones you care about on a limited income? A little planning and creativity are key! Here are some tips for enjoying the holidays without breaking the bank:


1. Plan early and set a budget

Budgeting for the holiday season is something you should think about in January or February, rather than at the end of the year, explains Sylvia Lim, a Vancouver-based Certified Financial Planner, Certified General Accountant and author of Finances after 55, in order to avoid the stress of dealing with all holiday-related expenses at once. Take a look at the discretionary amount you have to spend on your family and friends, make a list of those you're planning to buy gifts for, as well as any expected travel plans, events and parties early in the year. Plan how much you want to spend on each person/event and be sure to stick to your budget.


2. Plan how to meet that budget

Setting cash aside every month is a great way to save for your holiday expenses, says Lim. For example, if you think you want to spend $1,200 on Christmas gifts or travel expenses, set aside $100 a month. "That way, you don't have the pressure of coming up with the money when it's holiday-time, or not having the money, spending it, and then dealing with the aftermath in the New Year," she says. If you do use your credit card for holiday shopping/expenses, Lim recommends that you have the money behind it to pay the bill when it arrives, to avoid paying additional interest charges in the New Year.


3. Know who you want to buy gifts for and purchase early

Make a list of those you're buying for, and ask family and friends ahead of time what they would like (ideally by September or October) says Lim. This way you can keep an eye out for sales prior to Thanksgiving, such as end-of-season clothing sales.


4. Be honest with your family

It is possible to indulge the ones you care about during the holiday season and stay within your budget, says Lim, but don't live beyond your means to do it. Be honest with your family if this is not a good time for you to be spending too much money on gifts. One money-saving holiday tip might involve suggesting a change in tradition. An idea that is becoming quite popular, she says, involves drawing names within your family - with the end goal being that each person buys a nice gift for one person, instead of buying gifts for everyone. Alternatively, if you're hosting a holiday dinner, consider reducing your costs by making it potluck - ask everyone to bring their favourite dish.


5. Get crafty

Are you a talented knitter? Artist? Woodworker? Or perhaps you bake in your spare time? Use your talents to make personalized, handcrafted gifts for those on your holiday list - this can often cut costs, and everyone is sure to appreciate the thought and effort that you've put in.


View original article here.

Issue: 48
Financial Markets
In This Issue
Why a net worth statement is worth it
Budgets, Cash Flow Plans, and Spending. Yawn.
Five smart ways to stretch your holiday budget

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Peter Bailey
Wealth Advisor
Worldsource Financial Management Inc.
272 Lawrence Avenue West, Suite 203
Toronto, Ontario M5M 4M1 

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